Over the last few weeks, Strata Plan has received a number of calls from customers with questions about building insurance.

In particular, it has become apparent that some customers who own lots which are units or townhouses have organised their own building insurance, essentially doubling up on insurance costs. Please read below for all the important information you need to understand about Owners Corporation building insurance.

Part 1. Who Should Hold the Building Insurance?

No matter the size of your property, whether it’s a single unit in a three-lot subdivision, one townhouse in a 10-unit development, or an apartment in a 200-lot complex – if an Owners Corporation exists, your property is insurance under the Owners Corporation building insurance.  

This insurance policy will cover all individual lots in terms of building structure and building damage and as such lot owners should only be taking out contents (if occupying the lot) or landlords' insurance (if leasing the lot) on their individual lots.

This is more than just best practice, it forms part of the Owners Corporation Act (VIC) 2006.

Part 2. Legal Requirements for Owners Corporation Insurance

In other words, if your property is part of an Owners Corporation, then your Owners Corporation must insure your property. At a minimum, this insurance must cover your Owners Corporation for public liability but would typically include coverage for damage to the building.

Any customers paying for their own individual building insurance will, therefore, be doubling in costs.

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Part 3. Budgeting for Insurance Costs

Insurance costs should be budgeted for by your Owners Corporation and will form part of the levies you pay on a quarterly basis.

Of course, failure to adequately budget for insurance costs could leave your Owners Corporation short of the funds required to insure your building.

When this happens, insurance may be premium funded, or a special levy will need to be raised by all owners.

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Part 4. What Does Strata Insurance Cover?

Strata insurance policies typically cover the building structure on behalf of all owners within any given Owners Corporation.

Generally speaking, most strata insurance policies cover material damage as a result of an insured peril, for example, flooding (ie: as a result of rivers overflowing etc), water damage (ie: as a result of a burst pipe), or an accident such as a car crashing into a building, to structural fixtures including fixed plants, machinery and underground services.

Some of these include built-in ovens, stovetops, kitchen cupboards, hand basins, baths and showers. Of course, every insurance policy is different, and insurers are offering different ranges of cover. CHU, for instance, is now including coverage for floating floors as part of their standard coverage.

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Part 4. Additional Protections Under Strata Insurance

Strata policies also generally provide office bearers cover for those who hold positions on your Owners Corporation committee, as well as public liability cover for the common areas.

Of course, a strata insurance policy should also cover you and fellow owners for the entire replacement of the building – in line with your insurance valuations.

In short, your Owners Corporation’s insurance policy covers you and your fellow owners for a lot.

If your Owners Corporation is managed by Strata Plan, your building’s policy should be available on your building’s individual customer portal under Documents.

Part 5. FAQs about Owners Corporations Building Insurance

Do I need separate building insurance for my unit or townhouse?

No. If your property is part of an Owners Corporation, the building insurance must be held in the Owners Corporation’s name. Owners only need contents or landlord insurance.

What does strata insurance usually cover?

It typically covers structural damage, fixtures (such as kitchens and bathrooms), machinery, underground services, public liability for common areas, and sometimes extra items like floating floors.

How are insurance costs paid for?

Insurance costs are included in the Owners Corporation’s annual budget and collected as part of your quarterly levies. If not budgeted properly, a special levy may be raised.

Conclusion

Owners Corporation insurance is not just a formality. It is a legal requirement designed to protect all lot owners. By centralising building insurance under the Owners Corporation, owners avoid doubling costs and ensure their property is fully protected. Always check your policy through your Owners Corporation manager to understand exactly what is covered.

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